amg investor presentation november 2014 final
Post on 19-Jun-2015
1.036 Views
Preview:
DESCRIPTION
TRANSCRIPT
Investor PresentationNovember 2014
2
THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMGADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHERDISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLYWITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS.
This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer tobuy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basisof, or be relied on in connection with, any contract or commitment whatsoever.
This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunctionherewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. Thispresentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, ordispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities forsale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation noranything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The informationcontained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and noreliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company andits advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law,none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any losshowsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.
Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financialposition, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,”“expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs andexpectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual resultsto differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability,growth, cost and synergy of the Company’s recent acquisitions, the timely development and acceptance of new products, the impact ofcompetitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions.These and other factors could adversely affect the outcome and financial effects of the plans and events described herein.
Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend,update or revise any of the forward-looking statements contained in this presentation.
The information and opinions contained in this document are provided as at the date of this presentation and are subject to change withoutnotice.
This document has not been approved by any competent regulatory or supervisory authority.
Cautionary Note
3
Overview
Exchange: Euronext Amsterdam: AMGLTM Q3’14 Revenues: $1,117.5M
LTM Q3’14 EBITDA: $74.4MLTM Q3’14 Op Cashflow: $84.8M
Employees: 3,004Market Cap: $224.3M
Enterprise Value: $328.2MEV / EBITDA 4.4x
Shares outstanding: 27.6M 52 week range: €5.55 – €8.25
Recent share price: €6.50 (November 6, 2014)
4
Overview
Metals & alloys Coating materials
Capital equipment & service for high purity materials
Critical raw materials Concentrates
AMG Processing AMG EngineeringAMG Mining
AMG’s conversion and recycling based businesses
AMG’s vacuum systems and services business
Integrated AMG’s mine based businesses
5
AMG Processing
Aluminum grain refiners and master alloys for high performance materials in aerospace, automotive and infrastructure applications
Value Proposition
Ferrovanadium for high strength, low alloy steels for infrastructure; ferronickel-molybdenum for stainless steel
Titanium master alloys for high performance, light weight aerospace engine and frame, and coating materials for aerospace turbines
Major ApplicationsKey Products
AMG Processing – conversion and recycling operations
Chrome metal for stainless steel, electrical resistance wire, and superalloys
6
AMG Mining
Antimony trioxide and master batches for flame retardant on electronics, paints, and plastics
Value Proposition
Conflict-free tantalum concentrate for tantalum capacitors used on portable electronics
Natural graphite for building insulation materials, energy storage, li-ion batteries for electrical vehicle, and lubricants
Silicon metal for aluminum production and solar panel materials
Major ApplicationsKey Products
AMG Mining – mine based value chains
Tantalum and niobium superalloys for aerospace engines and industrial gas turbines
7
AMG Engineering
Vacuum melting and re-melting furnaces for high-performance titanium, steel and alloys, and purification of rare metals and alloys
Value Proposition
Vacuum heat treatment furnaces and services for high-performance materials of aerospace and automotive applications
Vacuum coating furnace for aerospace turbine blade coatings
Vacuum sintering and annealing furnaces for nuclear fuel productions
Major ApplicationsKey Products
AMG Engineering – vacuum systems and services
8
Critical Raw Materials The EU identified 14 critical raw materials* to the European economy in 2010 focusing on
two determinants – economic importance and supply risk In 2014, EU updated to 20 critical raw materials* following the same methodology AMG produces 6 of the 20 EU critical raw materials
9
Operations
AMG is improving operational performance and cash flow
Objectives Progress Update
■ YTD’14 SG&A increased by 2%■ Increased incentive compensation due to improved profitability
■ YTD’14 Gross Margin 16.7%■ Q3’14 Gross Margin up 6% for AMG Processing ■ Q3’14 Gross Margin up 5% for AMG Mining
■ YTD’14 Cash Flows from Operations $72.5M, versus $57.3M YTD’13
■ YTD ‘14 Record free cash flow $55.5M ■ Annualized ROCE of 11%
■ Net Debt declined by $56.7M, or 35%, compared to Dec.’13■ More efficient use of capital will result in a further reduction
of gross debt and interest expenses in Q4 ‘14
Reduce SG&A
Improve Gross Margin
Increase Operating Cash Flow and Improve ROCE
Reduce Gross and Net Debt
Note: Free cash flow is defined as cash flows from operating activities less cash flows used in investing activities
10
Financial Highlights
11
Revenue
$17.7
$10.5
$20.1 $20.4
$23.4
Up32%YoY
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14
Financial Highlights
$286.4 $284.0$274.9
$278.9
$279.7
Down2% YoY
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14
■ Q3 2014 fully diluted EPS: $0.12■ Up 140% from $0.05 in Q3
2013■ YTD EPS $0.53
Gross Profit
EBITDA
(in USD millions)
Adjusted EPS
$39.8 $41.0
$46.4 $45.0
$48.1
Up21%YoY
Q3 13 Q4 13 Q1 14 Q2 14 Q3 14
LTM Q3 2014: $1,117.5
LTM Q3 2014: $74.4
(in USD millions)LTM Q3 2014: $180.5
(in USD millions)
12
Financial Highlights Revenue
EBITDA
(in USD millions)
(in USD millions)YTD EBITDA: $63.9
YTD Revenue: $833.5 YTD Gross Margin: 16.7%
Gross Margin
Capital Expenditure
(in USD millions)YTD CAPEX: $17.2
$32.5
$31.0
$0.4
AMG Processing
AMG Mining
AMG Engineering
$424.1
$249.8
$159.6
AMG Processing
AMG Mining
AMG Engineering
$6.8
$8.2
$2.2
AMG Processing
AMG Mining
AMG Engineering
14.2%
19.4% 19.3%
AMG Processing AMG Mining AMG Engineering
13
Financial Highlights
Working Capital Days reduced by 61% since Q3’10
79
6970 70 70
65 65 65 6563
61
53
47
43
47
42
31
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
48 days, or 61% Reduction
14
Capital Base
■ Net debt: $103.9M■ $56.7M reduction on net debt in
2014■ Debt down 46% since 2012■ Debt to capitalization: 0.63x■ Net Debt to LTM EBITDA: 1.40x
■ Revolver availability: $69.4M■ Total liquidity: $191.6M
■ AMG’s primary debt facility is a $370M term loan and revolving credit facility■ 5 year term – until 2016■ In compliance with all debt
covenants
■ YTD ‘14 Cash Flows from Operations: $72.5M, compared to $57.3M in ‘13■ Record YTD ‘14 free cash flow
of $55.5M
$194.2
$160.5
$147.8
$103.9
2012 2013 30-Jun-14 30-Sept-14
$90.3M reduction in net debt since 2012
( in USD millions)
Net Debt
Operating Cash flow( in USD millions)
$45.0
$65.6 $69.7
$57.3
$72.5
2011 2012 2013 YTD '13 YTD '14
Note: Free cash flow is defined as cash flows from operating activities less cash flows used in investing activities
15
Key Products
YTD 2014: $833.5
Revenue Gross Profit
YTD 2014: $139.4( in USD millions) ( in USD millions)
16
End Markets
Infrastructure + 24%vs. YTD ’13
Improved volumes from the FeV capacity expansion
Infrastructure + 24%vs. YTD ’13
Improved volumes from the FeV capacity expansion
YTD 2014: $833.5
Revenue Gross Profit
YTD 2014: $139.4( in USD millions) ( in USD millions)
Aerospace37.5%
Infrastructure15.9%
Energy18.5%
Specialty Metals & Chemicals
28.1%
Aerospace35.1%
Energy19.2%
Specialty Metals & Chemicals
25.6%
Infrastructure20.1%
Infrastructure + 109%vs. YTD’13
Improved FeV prices and volumes
Infrastructure + 109%vs. YTD’13
Improved FeV prices and volumes
17
$138.1 $134.5
$13.0
$20.5
$10.0
$15.0
$20.0
$25.0
$30.0
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
Q3'13 Q3'14
Revenue Gross Profit■ Q3’14 revenue down 3% vs. Q3’13■ Ferrovanadium volumes up 78%
due to the capacity expansion■ Offset by 28% lower chrome
volumes due to focus on higher margin, lower volume chrome products
■ Q3’14 gross margin 15.2% of revenue, up 5.8% compared to Q3’13■ Improved product mix and
increased operating efficiencies in Vanadium, Superalloys, and Titanium Alloy & Coatings units
■ Q3’14 EBITDA up 157% vs. Q3’13■ Gross profit improved by 58%
AMG ProcessingFinancial Summary
- -
$4.6
$11.9
Up157% YoY
Q3'13 Q3'14
EBITDA
( in USD millions)
( in USD millions)
18
$82.3 $84.1
$12.8
$17.1
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
Q3'13 Q3'14
Revenue Gross Profit Q3’14 revenue up 2% vs. Q3’13 AMG Tantalum volume up 50%
and price up due to LT contract AMG Graphite volume up 13%
despite lower prices Silicon revenues up offsetting
declines in antimony revenues
Q3’14 gross margin 20.3% of revenue, up 4.7% vs. Q3’13 Increased revenue from higher
value-added products Production efficiency
improvements
Q3’14 EBITDA up 21% vs. Q3’13■ Gross profit improved by 33%
AMG MiningFinancial Summary
EBITDA
( in USD millions)
( in USD millions)
$8.9
$10.8
Up21%YoY
Q3'13 Q3'14
19
$66.1 $61.1
$4.2
$0.7
$(5.0)
$-
$5.0
$10.0
$15.0
$20.0
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q3'13 Q3'14
Revenue EBITDA Q3’14 revenue down 8% vs. Q3’13 Pricing pressure and delays in
order intake
Q3’14 gross margin 17.2% of revenue, down 4.0% vs. Q3’13 Reduced economies of scale and
pricing pressure
EBITDA declined due to the $3.5 million decline in gross profit
Q3’14 order intake $66.9M Heat treatment furnaces were
~43% of order intake 1.09x book to bill ratio Order backlog increased 3% to
$141.1M at September 30, 2014
AMG EngineeringFinancial Summary
$48.4 $39.6
$74.5$62.3 $66.9
Q3'13 Q4'13 Q1'14 Q2'14 Q3'14
Order Intake
( in USD millions)
( in USD millions)
Outlook
21
Metals Market – 2013 & 2014 YTD Prices
-18%-14%
-33%
-11%
-6%
-19%
-10%
-19% -19%
-10%-13%
34%31%
21%
14% 13%
5%2% 0% 0% 0% 0%
Ni Mo Ta Al Si Metal Nb FeV Cr Sb Ti Sponge Graphite
2013 Price Trend (12/31/2013 vs. 12/31/2012)2014 YTD Price Trend (9/30/2014 vs. 12/31/2013)
22
Outlook
FY2014 EBITDA growth in excess of 10%; FY2014 net income and ROCE will substantially above 2013 levels
AMG is well positioned to further reduce debt through increased profitability in 2015
Moving downstream into higher value added products in antimony and graphite
Increasing margins despite low market prices
Metals prices have limited downside risk for the foreseeable future
Operational improvements generating increased gross margins
Completed the sale of Bostlan S.A., an AMG Aluminum JV
Strong YTD 2014 order intake
Substantially improved order backlog
Increasing order intake and cost reductions should increase profitability in 2015
Strategic alternatives evaluation is continuing
AMG Processing AMG EngineeringAMG Mining
23
Appendix
24
Consolidated Balance SheetBalance Sheet ($’000) Actual
As of31-December-13 30-September-14
Unaudited
Fixed assets 259,683 240,954Goodwill and intangibles 37,194 34,441Other non-current assets 65,515 62,972
Inventories 179,343 157,453Receivables 150,807 156,100Other current assets 36,607 35,062Cash 103,067 122,230TOTAL ASSETS 832,216 809,212
TOTAL EQUITY 134,590 132,259
Long term debt 223,788 192,318Employee benefits 138,009 140,817Other long term liabilities 62,350 61,931
Current debt 39,792 33,774Accounts payable 127,381 126,569Advance payments 16,341 31,156Accruals 54,383 55,834Other current liabilities 35,582 34,554TOTAL LIABILITIES 697,626 676,953TOTAL EQUITY AND LIABILITIES 832,216 809,212
25
Consolidated Income StatementIncome Statement ($’000) Actual
For the nine months ended 30-September-13
Unaudited30-September-14
Unaudited
Revenue 874,421 833,511Cost of sales 737,753 694,137Gross profit 136,668 139,374
Selling, general & administrative 102,354 102,259Asset impairment & restructuring 58,191 1,811Other income, net (1,970) (1,630)Operating profit (loss) (21,907) 36,934
Net finance costs 16,431 13,552Share of loss of associates (530) (469)Profit (loss) before income taxes (38,868) 22,913
Income tax expense 2,383 8,912Profit (loss) for the period (41,251) 14,001
Shareholders of the Company (38,363) 14,600Non-controlling interest (2,888) (599)
Adjusted EBITDA 62,085 63,874
26
Consolidated Statement of Cash FlowsCash Flow Statement ($’000) Actual
For the nine months ended 30-September-13
Unaudited30-September-14
Unaudited
EBITDA 62,085 63,874Change in working capital and deferred revenue 27,369 27,639Finance costs paid, net (11,331) (8,922)
Other operating cash flow (9,261) (5,669)Cash flows from operations before taxes 68,862 76,922Income tax paid (11,544) (4,472)Net cash flows from operations 57,318 72,450
Capital expenditures (22,534) (17,232)
Other investing activities 436 248Net cash flows used in investing activities (22,098) (16,984)
Net cash flows used in financing activities (42,596) (30,791)Net increase/(decrease) in cash and equivalents (7,376) 24,675
Cash and equivalents at January 1 121,639 103,067Effect of exchange rate fluctuations on cash held 2,015 (5,512)Cash and equivalents at September 30 116,278 122,230
top related